Inflation Calculator
Inflation is the reason a number in the future is not worth what it looks like. This works the effect out in both directions: what something costing a given amount today will cost later, and what a future sum is actually worth in today's money.
| Amount: | |
| Annual Inflation Rate*: |
% |
| Years: |
* Inflation compounds annually at the rate you enter. This is exactly why money sitting idle loses ground over time — pair this with the Compound Interest tool to see how saving at a rate above inflation keeps you ahead.
The two directions, and which one you want
Future cost answers "what will this cost me later" — useful for a expense you know is coming: a child starting university, a roof that will need replacing, the car after this one.
Today's money answers the more uncomfortable question: a projection that ends at some large figure decades out is quoted in future dollars, and this converts it back into money you can reason about. It is the single most useful correction to apply to any long-range number, including the ones this site produces.
The third figure — purchasing power lost — is the same fact as a percentage. At 3% a year, money loses about a quarter of its value over a decade and roughly half over 25 years, which is a more legible way of saying the same thing than either of the amounts above.
Why this matters for savings and retirement
A savings projection that grows at 7% a year while inflation runs at 3% is not growing at 7% in any sense you can spend. The compound interest calculator deliberately works in nominal terms — it uses the rate you give it and does not deduct anything — so running its ending balance through this page is what turns it into a figure you can compare with today's prices.
The retirement projections take the other approach and run entirely in today's dollars, deflating the return before anything compounds. That is why the balances there look lower than a nominal calculator would suggest, and why they are the ones to trust over thirty years.
About the rate you enter
The calculation applies whatever annual rate you give it, evenly, for the whole period. Real inflation does not behave that way — it clusters, and the items in your own budget do not move together, with housing, healthcare and tuition historically outpacing the headline figure. A long-run average is a reasonable planning assumption and a poor forecast of any particular year.
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